Glossary

Exit strategy

What an exit strategy means on a short-term facility, and why lenders assess it as closely as the security itself.

An exit strategy is the specific, verifiable way a borrower intends to repay a facility at maturity — a signed contract of sale, a refinance already underway, the resolution of an ATO debt, or the sell-down of completed stock. On any short-term or interest-capitalised facility, lenders assess the exit as closely as the security itself, because the loan is not intended to be serviced indefinitely and a vague or speculative exit is one of the most common reasons a file is declined or repriced. A strong exit is specific and time-bound: "refinance to a bank once trading normalises" is weaker than a signed refinance approval with a settlement date. Borrowers who cannot articulate a clear exit are usually better served by a longer-term facility than by a short-term product priced on the assumption the loan will be repaid quickly.

Related

Bridging loans · Refinance · Residual stock

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